BSNL's FY11 losses increase 50% to Rs 2,725 cr

NEW DELHI: State-owned telecom firm BSNL is expected to post 50% higher losses for the year ended March 31, capping a series of dismal results in the last four years that saw the erstwhile monopoly being reduced to a bit player in the fast-growing market. The unlisted company has told the government that it will post 2,725-crore losses for the year-ended March 11.

BSNL, which suffered from rampant political interference under former telecom minister A Raja, had earlier announced a loss of 1,823 crore for the year to March 2010, a first for the company since it was set up. The losses would have been much higher but for the 4,132-crore income from non-telecom-related activities. The telco has also told a government panel that its revenues for the fiscal ended March 11 was expected to be 31,738 crore, about 1% lower compared to the previous year. The company has projected 623-crore losses for 2011-12. However, the revenue is likely to see a jump for the first time in five years with a projected increase to 36,569 crore in FY12.

BSNL has presented these figures to the Board for Reconstruction of Public Sector Enterprises, which has been in discussions with the telco's top management to chart out a revival path for it. ET has reviewed the BRPSE report, which contained the details of the telco's financials.

BSNL has been deteriorating in financial performance over the years as it could not expand on time. It could not compete with the nimble-footed private mobile phone firms, such as Bharti Airtel, which were taking decisions quickly. Such is BSNL's slide that it has sought a 3,000-crore loan to meet operating expenses in the fiscal ended March 11 as its expenditure was higher than its revenues by this amount.

BSNL saw its overall revenue fall from 39,715 crore in 2006-07 to 38,053 crore in 2007-08 and further to 35,812 crore in 2008-09, before falling to 32,046 in 2009-10. Its fall from grace is best explained from the fact that its annual revenues were over the 40,000-crore mark for the year-ended March 06.

For the fiscal year to end-March 2009, BSNL showed a meagre 575 crore as profit. Even this was possible only because interest income from its cash reserves was about 3,900 crore. In 2007-08, its net profit was 3,009 crore on interest income of 4,004 crore, proving that its profits in the past three years has less to do with its telecom business.

In 2009, Prime Minister Manmohan Singh, worried about the steep decline in BSNL's profitability over the years, sought revival suggestions from Sam Pitroda Pitroda and banker Deepak Parekh. They in turn recommended a strategic 30% stake sale and staffs cut by 100,000 and also raise funds from the sale of its infrastructure, such as signal towers and real estate. But the government's failure to act on the Pitroda report, despite the BSNL board's approval, has posted a serious setback in plans to revive the telco. BSNL's plans to sell 30% stake through an IPO. But the telecom department told a parliamentary committee last year that BSNL's listing will be taken up only after the company's performance improves in order to get the right valuation.

ET had reported on Tuesday that Board for Reconstruction of Public Sector Enterprises has recommended that BSNL merge with its smaller sister MTNL as well as communications gear maker Indian Telephone Industries ( ITI) .